by Claude Chendjou

PARIS (Reuters) – The main European stock markets are expected to fall sharply on Wednesday after contrasting Chinese statistics and while the session will be marked by the publication of several monthly indicators including inflation figures in the euro zone and retail sales in UNITED STATES.

According to the first available indications, the Parisian CAC 40 should fall by 1.09% at the opening. The Dax in Frankfurt could lose 0.98% and the FTSE 100 in London could lose 1.33%. The EuroStoxx 50 index is expected to fall by 1.16%.

Investors will receive final data on price developments in the euro zone for the month of December at 10:00 GMT. The Reuters consensus forecasts a rebound in inflation of 0.2% over one month but stagnation of 2.9% over one year.

In Britain, inflation accelerated again in December to 4.0% year-on-year, a pace higher than expected, while core inflation stood at 5.1% last month, a sign of persistent pressure on prices.

In the United States, the main indicator concerns retail sales, forecast at 1:30 p.m. GMT, which should increase by 0.4% over one month after +0.3% in November.

The data is important as markets continue to price in the prospect of a rate cut from the European Central Bank (ECB) and the US Federal Reserve (Fed) as early as March, which central bankers expect use to temper.

A WALL STREET

The New York Stock Exchange ended down on Tuesday, while the mixed results communicated by Goldman Sachs and Morgan Stanley weighed down the banking sector, while the decline of Apple and Boeing also weighed on the S&P-500.

The Dow Jones index lost 0.62% to 37,361.12 points.

The broader S&P-500 lost 0.37% to 4,765.98 points.

The Nasdaq Composite fell 0.19% to 14,944.35 points.

As Wall Street was closed on Monday, Morgan Stanley fell 4.2% to a more than one-month low after reporting a lower quarterly profit, while Goldman Sachs advanced 0.7 % following the jump in its profit.

The market gloom was fueled by comments from Fed Governor Christopher Waller, who said there was no need for the US central bank to rush to lower interest rates, even if it said he was more confident about bringing inflation under control.

Ten of the eleven major sectors of the S&P-500 ended the session in the red, led by energy, down 2.4%. Apple fell 1.2% in the wake of a rare reduction in the prices of its iPhones decided in China to respond to fierce competition in the country.

Boeing plunged nearly 8% to a two-month low following the US Aviation Administration’s decision to ground the 737 MAX 9 for an indefinite period.

Spirit Airlines plunged 47% after a US federal judge blocked JetBlue Airways’ takeover of the airline.

IN ASIA

On the Tokyo Stock Exchange, the Nikkei index ended down 0.4% to 35,477.75 points, in a volatile session during which it reached a new 34-year high after a jump of more than 1% in session.

The broader Topix lost 0.3% to 2,496.38 points at the close.

The MSCI index bringing together stocks from Asia and the Pacific (excluding Japan) fell 1.80%, to a new one-month low.

In China, the Shanghai SSE Composite fell by 1.99% and the CSI 300 fell by 2.08% after contrasting Chinese indicators.

Industrial production (+6.8% in December year-on-year) was higher than expected, but growth in retail sales (+7.4%) disappointed, while gross domestic product (GDP), which increased of 5.2% in the fourth quarter on an annual basis, was below analysts’ forecasts. The Chinese population also fell in 2023 for the second consecutive year, to 1.409 billion inhabitants.

“The set of economic data released by China today seems to reflect the same thing: an uneven growth environment, which does not yet offer much conviction of a sustainable recovery,” comments Jun Rong Yeap, market strategist at IG.

EXCHANGES/RATES

The dollar rose 0.20% against a basket of reference currencies, to a high of almost a month after Christopher Waller’s comments.

The euro fell by 0.12%, to $1.0861, while the pound sterling stood at $1.2625 (-0.09%).

On the bond market, the yield on ten-year US Treasury bonds is stable, at 4.0656%, but it had fallen below the symbolic threshold of 4% on Friday, to 3.95%.

The yield on the German Bund of the same maturity stands at 2.257%, up more than four basis points.

OIL

The oil market is penalized by Chinese statistics which revive concerns about demand: Brent falls by 0.86% to 77.62 dollars per barrel and American light crude (West Texas Intermediate, WTI) by 0.97% to $71.70.

(Written by Claude Chendjou, edited by Blandine Hénault)

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